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LGIAsuper and Energy Super enter merger discussions to explore benefits to members

LGIAsuper CEO Kate Farrar

Published 7 October 2020

LGIAsuper has today announced it is in the initial stages of exploring a potential merger opportunity with fellow leading Queensland profit-for-member superannuation fund, Energy Super. 

The two funds signed an exclusive Memorandum of Understanding (MOU) to enter a due diligence process that will consider how a merger could allow LGIAsuper to innovate and compete more effectively, while still maintaining its boutique fund status and values. 

LGIAsuper Chair John Smith said while the merger exploration was in the early stages, the fund was optimistic that this merger could provide an opportunity for the fund to grow and provide enhanced benefits to members. 

“We pride ourselves on our commitment to keeping members’ best interests at the core of all we do, and that is the lens through which we are exploring this opportunity,” Mr Smith said. 

“Both LGIAsuper and Energy Super share a decades-long history of serving Queenslanders, strong investment track records, member-first philosophies, and a focus on personalised service.

“We believe the areas of alignment encourage further exploration of whether we could better deliver for our members as a combined fund,” he said.

If the due diligence process reveals that a merger is in our members’ best interests, the fund would remain boutique and personal, but with greater size and scale to serve our members, reduce costs and maximise returns without sacrificing what makes us different. 

As LGIAsuper explores this opportunity our members do not need to do anything. However, we will continue to keep you informed. If you have any questions, we’re here to help. Please do not hesitate to contact us on
1800 444 396.

Frequently asked questions

  • Q. Will there be any changes to my membership?

    • Everything will stay the same for the foreseeable future, we will keep you informed of any decisions that may be important to you as a result of these discussions.  
  • Q. Why are you doing this?

    • Over the past two years, LGIAsuper has been progressively working to improve our fund and ensure its long-term sustainability and performance for members.
    • The next step in this process is to explore the benefits and savings that greater size and scale can bring to members.
    • This process is in line with guidance provided by the regulator to ensure the best possible outcomes and efficiencies for members. 
  • Q. Is this because of market volatility as a result of COVID-19?

    • No, this is an opportunity that has arisen because our funds have similar priorities and are keen to explore whether it would be beneficial to partner as a combined fund.
  • Q. Who is Energy Super?

    • Energy Super is a strong profit-to-member superannuation Fund with almost 50,000 members and $7 billion in funds under management.
    • As a proud Industry Super Fund with a 40-year heritage, Energy Super has always been a fund of choice for the energy industry. Like us, they are now an open fund and pride themselves on individualised service.
    • Energy Super has been rated as a value-for-money fund with independent ratings agency SuperRatings for more than a decade.
    • It has a long history of serving employees working in the electricity industry in Queensland. Up until a few years ago, most of Queensland’s electricity companies were government-owned and Energy Super’s members therefore share a lot of characteristics with LGIAsuper’s members in the local government sector.
    • Energy Super is the default fund for the employees of government-owned Energy Queensland, which includes the businesses of Ergon Energy, Energex and Yurika. As profit-for-member funds, both LGIAsuper and Energy Super’s focus is to act in the best interests of members.
    • Similar to LGIAsuper, Energy Super invests in wide range of asset classes including shares, property, infrastructure and resources and has a track-record of delivering strong and sustainable returns to members. Energy Super is also proud to be an investor in renewable energy generators. The fund recognises the importance of being part of such an important social transition.
  • Q. What role does social responsibility play in Energy Super’s investment philosophy?

    • Energy Super considers environmental, social and governance (ESG) risks, impacts and opportunities in its investment decision-making to protect and manage members’ investments for the long term. All of Energy Super’s investment managers are signatories to the internationally recognised Principles for Responsible Investment, which demonstrates the fund’s commitment to socially responsible investment.
    • Energy Super adopts a practical and balanced approach to ESG management and, like any super fund, Energy Super’s investments are never dominated by any particular industry.
    • It invests in sharemarkets across the world and it has investments in a range of clean-energy technologies in addition to traditional coal mining, oil, and gas companies. Energy Super is also proud to be an investor in renewable energy generators and recognises the importance of being part of such an important social transition.
    • Energy Super is reluctant to exclude particular investments as this limits the investable universe and has the potential to create inefficient portfolios. Its investment process is transparent. In 2014, Energy Super was the first fund to give members a clear view of where their money was being invested and its investments can be viewed on its website.
    • Energy Super has a specific socially responsible investment option - the SRI Balanced option – which is an externally managed, multi-manager, balanced fund. This fund explicitly considers the impacts of ESG issues, identifying leaders within industries in their responsible approach to ESG issues. This fund excludes investments in areas that have a high negative social impact.
  • Q. What is Energy Super's involvement with fossil fuels?

    • Many of Energy Super's members work in the energy sector, in both traditional and renewable energy production. With the renewable sector expanding, we can expect more members will be involved in clean energy production in the future.
    • Some of Energy Super’s largest employers are already heavily involved in renewable energy, such as CleanCo, Energy Queensland and Powerlink.
    • As a public fund, Energy Super’s members and employers also come from a wide range of other sectors, industries and communities.
  • Q. What do LGIAsuper and Energy Super have in common?

    • Our preliminary exploration has been positive and indicated the two funds have a lot in common.
    • As profit-for-member funds, our motivation is to act in the best interests of members. Both funds are viewed as highly successful in their own right and we share common heritages.
    • We both started servicing members from a specific sector and have now broadened to serve members from many industries.
    • Both funds also have a strong track-record of and commitment to delivering strong and sustainable returns to members.
    • We are both Queensland funds with a focus on understanding our members and share a common vision to remain personal and boutique.
  • Q. What kind of benefits could a merge provide?

    The due diligence process we have agreed to undertake will investigate whether the merger could deliver:

    • Better investment opportunities 
    • Lower fees
    • Opportunities to improve products and services
    • More opportunities to invest in and support communities Queensland-wide.

    If we did merge, we would still be a boutique and personal fund, based in Queensland, but with greater size and scale to serve our members, reduce your costs and maximise returns without sacrificing what makes us different. 

  • Q. What will a merger mean for me?

    • If the merger proceeded, you would be part of a strong, $20 billion fund with approximately 123,000 members.
    • This would potentially give you access to the benefits (see above).
    • The merger will not proceed unless LGIAsuper, Energy Super, and the regulatory authorities determine that this is in members’ best interests. 
  • Q. What is the process?

    • We have now signed a Memorandum of Understanding, or MoU, with Energy Super to enter a period of exclusive due diligence to explore a merger. 
    • That means the two funds will work closely together and share information to fully understand each business and identify what benefits a merger would deliver for our members. 
    • The review of each fund’s operations will consider the best way to combine and leverage their greater size to deliver the best outcomes for our members.
  • Q. When will we know if the merger is going to proceed?

    • There is a considerable amount of work involved in the due diligence process before we can move to a formal agreement. 
    • We are targeting to reach a formal agreement by the end of 2020 but combining the funds would take longer to achieve and would not likely happen until the second half of 2021.
    • We will keep you updated as this process proceeds.
  • Q. How can I find out more?

    • To find out more, visit the LGIAsuper website or contact us on 1800 444 396.